Right when increasing mortgage interest rates were having the effect of slowing the pace of real estate the closing of the federal
goverment has caused overall demand for home purchases to slow. Further, the effect is a decline in loan demand and consequently a
a decline in rates.
The increase in the pace of average sale prices of homes locally has also declined.
Penobscot County home sales for September of 2011 reached 27.7 million dollars and increased 13.2% to 31.3 million in September of 2012. During the same period the average home sale price increased 2.5%. Sales for September 2013 increased by 36% compared to September of 2012 to 42.8 million with the average home price increase slowing to a 1.2% pace.
The average sale price of homes sold in Penobscot County in September of 2011 was $121,400 and increased to $124,280 in September of 2012. The 1.2% rise in the average sale price from September 2012 to 2013 placed the average sale price at $125,900.
Spending authority for most of government expired midnight Septermber 30, 2013 causing many offices and programs of the federal government to shut down.
This means many government programs, including some that impact housing and mortgage programs may be affected, either suspended or slowed due to the lapse in funding. The FHA (Federal Housing Administration) participates in providing mortgage financing for nearly 15 percent of home purchases nationally. Its Office of Single Family Housing will endorse new loans under current multi-years appropriation authority in order to support the health and stability of the U.S. mortgage market.
New applications through the FHA may be impacted if there are requirements for lender information from the Internal Revenue Service. Otherwise local lenders seem cautiously positive about the availability of government loan guarantees and their important role in the financing of single family homes.
Realtors report that the overall uncertainty created by the interruption of government services is not positive for the general mood of consumers. On a national level there has been a general decline in mortgage loan demand which has been significant enough to cause mortgage interest rates to soften. Most, however, are confident that this interruption will be over shortly and at the very least might provide a lower monthly mortgage payment for those who are currently entering contracts to buy homes!
Nationwide Pending Home Sales slowed in August, with tight inventory conditions, higher interest rates, rising home prices and continuing restrictive mortgage credit impacting the market, according to the National Association of REALTORS®.
The Pending Homes Sales Index, a forward-looking indicator based on contract signings, eased 1.6 percent to 107.7 in August from a downwardly revised 109.4 in July, but remains 5.8 percent above August 2012 when it was 101.8; the data reflect contracts but not closings. Pending sales have been above year-ago levels for the past 28 months.
Lawrence Yun, NAR chief economist, said the decline was expected following elevated levels of closed existing-home sales at the end of summer. “Sharply rising mortgage interest rates in the spring motived buyers to make purchase decisions, culminating in a six-and-a-half-year peak for sales that were finalized last month,” he says. “Moving forward, we expect lower levels of existing-home sales, but tight inventory in many markets will continue to push up home prices in the months ahead.”